Financing fast-growing cities

Many developing country cities are growing at an unprecedented rate. To respond to this unplanned, rapid expansion, it will be beneficial for city authorities both to expand existing revenue sources and explore new financing options to match higher demand for public services.

Cities like Kampala, Uganda, will triple in size by the year 2050, according to estimates (Collier, 2017). This is due to high population growth rates and large flows of people from rural areas attracted by the opportunities cities offer. As a result, many developing country city authorities around the world are facing increasing financial challenges. A large number of these countries are also undergoing a decentralisation process, with local and city authorities bearing greater responsibilities for public service provision.

In fast-growing developing country cities, efficient and effective service provision is constrained by limited municipal finance. This brief outlines how city authorities can expand local revenue sources, increase the efficiency of local tax collection, and explore untapped revenue sources, namely land and property tax.